Preheat the oven to 400 F. Cream butter, cream cheese, vanilla, and ⅓ cup powdered sugar. Blend in 2 cups of flour and salt. Then work in remaining ¼ cup flour to form a smooth dough.
Divide the dough in half and roll half of it 1/4 inch thick. Cut into 2 in squares or circles. Make a slight indent in the center and fill with scant 1/2 teaspoon preserves.
Finish shaping squares or circles by tightly pinching opposite ends together. Place about 2 inches apart on ungreased cookie sheets. Repeat with the second half.
Bake for 12-17 minutes. Cool and dust with powdered sugar.